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On June 13, 2024, Terraform Labs PTE, Ltd. and Do Kwon agreed to pay more than $4.5 billion to settle the SEC’s case against them. The settlement followed a jury verdict holding Terraform Labs and Kwon liable for securities fraud. The jury was out for less than two hours after the court gave the case to them for deliberations.

That’s a lot of money. Specifically, Terraform Labs and Kwon agreed to pay $3,586,875,883 in disgorgement and $466,952,423 prejudgment interest. According to a letter the SEC submitted to the court in support of the proposed judgment, the disgorgement amount represents a reasonable approximation of the defendants’ profits from their unregistered offers and sales of LUNA, MIR, and UST. Terraform Labs must also pay a $420,000,000 penalty; not purchase, offer, or sell crypto asset securities, including LUNA, MIR, and UST; and distribute its remaining assets to investors and creditors via a liquidation plan subject to approval by the court in Terraform’s related bankruptcy case. Kwon also agreed to pay an $80,000,000 penalty.


We here at SKrypto have given the SEC some grief in the past for bringing standalone crypto asset registration cases. “Let them bring fraud cases. That is where the market needs them,” we said. Well, they just dragged a huge fraud case across the finish line.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


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Philip Moustakis | Partner

A former senior counsel in the SEC’s Division of Enforcement, Philip advises companies and individuals at Seward & Kissel on cryptocurrencies and blockchain technology, SEC enforcement matters, other regulatory investigations, and internal investigations. As a founding member of the SEC’s Cyber Unit, Philip advised the Commission on cryptocurrencies and investigated matters involving initial coin offerings (ICOs), unlawful touting of ICOs, and other violations of the federal securities laws related to cryptocurrencies. Publicly filed enforcement matters Philip spearheaded included the SEC’s first ever Bitcoin-related enforcement action against the operator of Bitcoin Savings & Trust, a Bitcoin-denominated Ponzi scheme, settled proceedings against an operator of a Bitcoin-related social media marketing venture and a popular Bitcoin betting site for the offer and sale of unregistered securities, and settled proceedings against an operator of unregistered cryptocurrency-denominated securities exchanges and broker-dealers.

“The SEC is a principles based regulator, and it will assert its jurisdiction over any securities offering or transaction, as it has done since the onset of the ICO craze, regardless of the technology used to facilitate such an offering.”

Philip’s thoughts on the recent SEC enforcement action against Kik Interactive, Inc. as published in the Crowdfund Insider article “Former SEC Senior Counsel Comments on Kik Ruling: Kik Could Have Benefited From Traditional Capital Markets Lawyer"